Tue Jun 11, 2019 8:00am EST

NEW YORK, June 11, 2019 /PRNewswire/ -- Commodities decreased as ongoing trade risks between the US and China dampened demand expectations for energy, base metals and livestock commodities.

The Bloomberg Commodity Index Total Return declined for the month, with 16 out of 23 constituents posting losses.

Credit Suisse Asset Management observed the following:

  • Energy decreased 11.97%, led lower by crude oil and petroleum products, due to US inventory builds and on weakening demand expectations as the ongoing trade war between the US and China weighed on the global growth outlook.
  • Industrial Metals declined 5.88% as the US and China both raised tariffs on imports from each other's nation, reducing base metals demand broadly.
  • Livestock fell 5.63%, led lower by Live Cattle, after the USDA reported that beef exports in March declined approximately 5% compared to the year prior. Heightened US-Mexico trade tensions also weighed on US beef export expectations.  
  • Precious Metals ended the month relatively flat, gaining 0.72%. The various escalating trade threats led to a risk-off environment while spurring safe haven demand for Gold.
  • Agriculture increased 7.57%, led higher by Wheat and Corn, as heavy rainfall in the US Midwest and Great Plains reduced crop yield expectations.

Nelson Louie, Global Head of Commodities for Credit Suisse Asset Management, said: "The US and China may resume trade talks at the upcoming Group of 20 Summit in Japan as both administrations signaled that they would prefer a resolution rather than continued strained relations. A loosening of trade tensions could increase the demand for base metals and agricultural commodities. In the meantime, grains have been impacted by extreme weather events in the US Grain Belt and Europe's Black Sea region. If bad crop weather persists, then wheat and corn crop yields for the season may be further reduced, potentially ending the trend of multi-year bumper crops. In addition, growing conflict between Iran and the US may increase crude oil supply risks in the Middle East. Further escalation could result in further production disruptions and reduced export capabilities out of the Persian Gulf. Declining crude prices and increasing US inventories may also encourage OPEC and its partners to extend their crude oil production cut agreement longer than they otherwise would."

Christopher Burton, Senior Portfolio Manager for the Credit Suisse Total Commodity Return Strategy, added: "US economic data have grown more mixed as of recent. The US unemployment rate dropped to 3.6% in April, and US inflation in April rose slightly but remains well below US Federal Reserve (Fed) targets. However, softening US factory activity in April showed that the US economy is not immune to cooling growth elsewhere. As a global economic growth slowdown or recession now appears more likely, central banks seem to be suggesting they are prepared to shift back to easier monetary policies. Markets are now pricing in that the Fed will be lowering the Fed Funds rate within the next three months, after pricing in hikes as recently as November of 2018, which is a noticeable shift in guidance. Central banks continue to be very flexible in their policy–making as they adapt to the changing economic landscape. Their actions may help to forestall any dramatic weakening in the global economy. At the same time, they appear more willing to potentially let the economy and inflation run hotter for longer on the upside, which would be beneficial to commodity prices."

About the Credit Suisse Total Commodity Return Strategy

Credit Suisse's Total Commodity Return Strategy is managed by a team with over 35 years of combined experience, and seeks to outperform the return of a commodities index, such as the Bloomberg Commodity Index Total Return or the S&P GSCI Total Return Index, using both a quantitative and qualitative commodity research process. Commodity index total returns are achieved through:

  • Spot Return: price return on specified commodity futures contracts;
  • Roll Yield: impact due to migration of futures positions from near to far contracts; and
  • Collateral Yield: return earned on collateral for the futures.

As of May 31, 2019, the Team managed approximately USD 6.7 billion in assets globally.

Press Contacts
Candice Sun, Corporate Communications, +1 (212) 325-8226, candice.sun@credit-suisse.com
Andre Rosenblatt, Corporate Communications, +1 (212) 325-8230, andre.rosenblatt@credit-suisse.com

Credit Suisse AG

Credit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of companies (referred to here as 'Credit Suisse'). Our strategy builds on Credit Suisse's core strengths: its position as a leading wealth manager, its specialist investment banking capabilities and its strong presence in our home market of Switzerland. We seek to follow a balanced approach to wealth management, aiming to capitalize on both the large pool of wealth within mature markets as well as the significant growth in wealth in Asia Pacific and other emerging markets, while also serving key developed markets with an emphasis on Switzerland. Credit Suisse employs approximately 46'200 people. The registered shares (CSGN) of Credit Suisse AG's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.

Important Legal Information

This document was produced by and the opinions expressed are those of Credit Suisse as of the date of writing and are subject to change. It has been prepared solely for information purposes and for the use of the recipient. It does not constitute an offer or an invitation by or on behalf of Credit Suisse to any person to buy or sell any security. Any reference to past performance is not necessarily a guide to the future. The information and analysis contained in this publication have been compiled or arrived at from sources believed to be reliable but Credit Suisse does not make any representation as to their accuracy or completeness and does not accept liability for any loss arising from the use hereof.

Certain information contained in this document constitutes "Forward-Looking Statements" (including observations about markets and industry and regulatory trends as of the original date of this document), which can be identified by the use of forward-looking terminology such as "may", "will", "should", "expect", "anticipate", "target", "project", "estimate", "intend", "continue" or "believe", or the negatives thereof or other variations thereon or comparable terminology. Due to various risks and uncertainties beyond our control, actual events, results or performance may differ materially from those reflected or contemplated in such forward-looking statements. Readers are cautioned not to place undue reliance on such statements. Credit Suisse has no obligation to update any of the forward-looking statements in this document.

Certain risks relating to investing in Commodities and Commodity-Linked Investments: Exposure to commodity markets should only form a small part of a diversified portfolio. Investment in commodity markets may not be suitable for all investors. Commodity investments will be affected by changes in overall market movements, commodity volatility, exchange-rate movements, changes in interest rates, and factors affecting a particular industry or commodity, such as drought, floods, weather, livestock disease, embargoes, tariffs and international economic, political and regulatory developments. Commodity markets are highly volatile. The risk of loss in commodities and commodity-linked investments can be substantial. There is generally a high degree of leverage in commodity investing that can significantly magnify losses. Gains or losses from speculative derivative positions may be much greater than the derivative's original cost. An investment in commodities is not a complete investment program and should represent only a portion of an investor's portfolio management strategy.

Copyright © 2019, CREDIT SUISSE GROUP AG and/or its affiliates. All rights reserved.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/commodities-decreased-as-trade-risks-reduced-demand-expectations-300865234.html

SOURCE Credit Suisse AG



More Trending News & Market Analysis